A set of accounting concepts, principles, assumptions and conventions which provides the conceptual basis or framework for financial accounting book-keeping and records.In turn, these aim to establish a degree of uniformity, comparability and understandability in the accounting system, and all relevant procedures and presentations of accounting information that properly meet the needs of the management and broader users. These concepts and assumptions help to make financial statements comparable for a better assessment and comparison of performance.

These concepts and assumptions come under the following main categories:

Basic assumptions:

• • • Separate entity concept (also known as accounting entity)
    • Going concern concept
    • Money measurement concept
    • Accounting period concept

Basic principles/ concepts:

• • • Verifiability and objectivity of evidence
    • Historical cost concept
    • Conservatism concept
    • Revenue recognition concept (also known as realization concept)
    • Matching principle
    • Full disclosure concept
    • Cost concept
    • Duality concept

Modifying principles:

• • • Materiality concept
    • Consistency concept
    • Prudence
    • Substance over form
    • Timeliness